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Comment by twblalock | Hacker News Reader

> Talking to a few activists about this solution and most of them say that "building your way" out of it only makes sense if you are also building affordable housing.

They are incorrect. Building luxury housing will take some of the demand pressure off of non-luxury housing (which constitutes the vast majority of the housing in San Francisco), thereby lowering its price.

The only way this wouldn't work is if nobody could afford to live in the new luxury housing. But we know for sure that there are plenty of people who want to, can afford to, and are moving into the newer luxury developments as soon as they are available. The lower-quality housing those people move out of is now available for people who can't afford the new luxury housing.

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> They are incorrect. Building luxury housing will take some of the demand pressure off of non-luxury housing (which constitutes the vast majority of the housing in San Francisco), thereby lowering its price.

Agreed. Also, rich people can just buy an old Victorian and modernize the inside, converting a non-luxury housing unit into a luxury one. That's one less unit on the market for normal people to buy or rent.

For example: http://sf.curbed.com/2015/10/8/9913302/victorian-disembowele...

This is what happens when you don't allow development to proceed. It only makes things worse. Rich people will get their luxury housing, one way or another. The rest of us are left with fewer options.

> Also, rich people can just buy an old Victorian and modernize the inside, converting a non-luxury housing unit into a luxury one.

Oh, it's worse than that: they can buy an old Victorian full of apartments and convert several non-luxury housing units into a single luxury housing unit. Which is something that tends to be generally encouraged by the zoning and planning codes, because single family houses are regulated much less strictly than any other kind of building, and also tend to be exempt from things like rent control.

> Nothing stops capital from rushing into non-luxury housing, acquiring it, and then renting it at new "market rates".

Supply and demand-- you build enough, and you cannot have artificially high "market rates."

There's another way it wouldn't work: if the pent-up demand is so large that it would take an impractical number of units to make any dent in the non-luxury market price. It's possible that this is the case: I read about one economic study that claimed that in SF today it would take about 100,000 new units before prices started falling, which is a pretty impractical number. (Sorry, I don't have a citation at the moment but I can try to find it later.)

Nothing stops capital from rushing into non-luxury housing, acquiring it, and then renting it at new "market rates".

You will need to swamp SFBA with housing (tens of thousands of new units a year) in order to drive down market prices.

Non-luxury housing is already being rented at market rates, except for the rent-controlled units, but those are effectively not part of the liquid housing market anyway because the tenants won't leave. Hence the recent increase in landlords trying to force the tenants out, so the housing can be rented at the market rate, like all other housing already is.

Everything I wrote presupposes that all housing is rented at the market rate, including the non-luxury housing.

I suppose you put quotes around "market rates" as a form of sarcasm, but aside from rent-controlled units, all housing rents at the equilibrium market rate determined by supply and demand. If someone jacks up the price of older apartments and is still able to find tenants, all that proves is that those apartments had been rented out at a price below the market rate before now. The market rate is quite simply the amount people are willing to pay.

> I suppose you put quotes around "market rates" as a form of sarcasm, but aside from rent-controlled units, all housing rents at the equilibrium market rate determined by supply and demand. If someone jacks up the price of older apartments and is still able to find tenants, all that proves is that those apartments had been rented out at a price below the market rate before now. The market rate is quite simply the amount people are willing to pay.

Hence, my quotes around "market rate". The tech industry can afford to keep pouring salaries into employee pockets, therefore, tech workers will always be able to price out non-tech workers seeking affordable rents in the bay area.

You will never be able to outbuild what Facebook, Google, and the like can pay their workers. Zoning is not the issue, a slanted labor market is. And the tech labor market will continue to soak up whatever housing comes onto the market.

The Seattle and Denver metros are managing to keep a lower deficit of available housing than the SF Bay Area.

The high salaries of developers in the Bay Area are a reaction to that feedback loop. The companies you listed offer lower salaries to workers outside of the Bay Area, using what they call Prevailing Market Rate to determine pay bands.

I don't really understand why Apple, Facebook, Google, et al. spend so much money on hiring in the Bay Area instead of hiring aggressively outside of it in cheaper regions. Are they benefiting from the network effect anymore? I can understand startups needing to be close to VC funding sources, but how does it benefit the larger players?

Quite a few of the best software engineers in the world live in the Bay Area and do not want to leave, and the larger players want to hire them. They could hire engineers elsewhere for a lot less money, but they want to hire these specific engineers, and are willing to pay what it takes.

> Quite a few of the best software engineers in the world live in the Bay Area and do not want to leave, and the larger players want to hire them. They could hire engineers elsewhere for a lot less money, but they want to hire these specific engineers, and are willing to pay what it takes.

Unless its more financially advantageous to train new engineers then keep paying the ones in SFBA? 7 billion people? Its not like only the brilliant ones are in SF.

It doesn't quite work like that... being a brilliant engineer isn't a matter of "training". And because of the attraction factor, yes, a lot of the brilliant ones end up in the bay area. For years the only place to do cutting edge tech was here, and it's pulled them in, from far away. Out of the country even.

So more than you think in fact.

None of the big software companies have remote development cultures, and most don't even have serious offices away from HQ. You can work for Google or Facebook away from SFBA, in a couple of smaller satellite offices, but it'll limit the kinds of things you can work on.

None of those companies are going to restructure their engineering cultures just to relieve housing pressure in SF. Just like the rest of the mainstream, they probably see the problem in SF as one of artificially limited supply, not demand.

You will never be able to outbuild what Facebook, Google, and the like can pay their workers.

NYC 1921-1929 (prior modern zoning): "The total of 658,780 new dwellings averaged 73,198 units per year, a figure ... In the most prolific year, 1927, 94,367 dwellings were built"

https://books.google.com/books?id=AS1bGTRSggYC&pg=PA122&lpg=...

"You will never be able to outbuild what Facebook, Google, and the like can pay their workers."

Heh. Okay, let's not even try.

Am I stopping you? Is anyone stopping you from trying? Get funding. Attempt to community organize renters. Attempt to sway public opinion and zoning commissions. You waste the next 5-10 years of your life spinning your wheels. Me? I've got more productive ways to spend my life then trying to live in a specific region. The world is a huge place.

>You will never be able to outbuild what Facebook, Google, and the like can pay their workers.

"Never" is a long time. Mature companies don't continue with gangbuster growth, and eventually company management has to look around for savings. San Francisco isn't immune to what happened to the rust belt cities.

"You will need to swamp SFBA with housing (tens of thousands of new units a year) in order to drive down market prices."

Or just wait ... what, another year or two ?

Every 5-8 years you have an opportunity to buy SFBA real estate at fire sale prices. If all of the activists and hand-wringers and bloggers[1] spent half as much time doing some simple financial planning instead of bemoaning the end of SF as they know it, they'd all be owners instead of renters and the "character" of the city (as they understand it) would be saved.

Or is it different this time ?[2]

[1] http://www.48hills.org/

[2] No, it isn't.

> You will need to swamp SFBA with housing (tens of thousands of new units a year) in order to drive down market prices.

Ok, when do we start?

When you convince the majority of SFBA property owners (ie voters) its in their interest.

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